Balance of power indicator

This is an indicator, called balance of power, which was developed by Igor Livshen. The method for using this indicator is as the name already say, it measures the balance beetwen uptrend and downtrend and which one of these is more powerfull. It does this by analysis of price movement over the period of time. It can also be used for binary options trading and that is why we will go through it.

WHAT IS BALANCE OF POWER?

Balance is everywhere around us, it is in nature, where when it is breaked, we get consequences with natural disasters. Same applies to rules of countries and where we live. If everything is in balance then we have no war. Something similiar comes with this indicator where this histogram is similiar to MACD. It is simple, when one side of the trade is more powerfull then the other, this balance of power goes into their favor.

Indicator itself is easy to program into your metatrader 4 platform or other platforms aswell. The link to the formula and indicator is here:

Click here to go to balance of power indicator

You will see that each day is represented with a bar that forms a histogram with peaks. The formula for balance of power is:

Balance of power = (closing price – opening price)/(high price – low price)

balance of power indicator

Meaning that if you want to calculate daily balance you have to substract first closing price from the opening and then you have to divide the number you get by the high price substracting from the low price.

WHAT CAN THIS INDICATOR SHOW YOU?

You can use the indicator in different time frames. It can give you signals for crossovers, convergences and also divergences.

The basid signal is the line crossover. When you see a trend following crossover you can see it is a strong signal. For example we can take a look at this, trend crossover on the chart with daily prices can be good for a movement which can last from days to weeks. It si recommended for beginners to use trend following since it is easier.

WHY IS IT BAD AND WHY IS IT GOOD?

As you know, every indicator can be bad at some point. I would suggest that you use this tool in combination with other tool so you can increase your profitability. If you will use it on your own, it can happen that you will get alot of false signals. It is good if it is used with trend following as i said for the beginners since you can see more clear signal. Of course it is also good for more expirienced traders which can get good data or signlas from the tool.

FINALE

This indicator is nothing specila but it is not bad at all. It uses a simple formula which we have described and also gives you nice and simple to follow signals, especially in trend following.


What is economic calendar and how to use it?

Economy as itself is very important since it affects global finance market. That is why you need to know what is happening in order to succed in binary options trading. That is why economic calendar is a good tool which can give you better insight. You can always follow at our binary options economic calendar here.

binary options economic calendar

WHAT YOU WILL LEARN HERE:

  • What is economic calendar?
  • Why is it bad and why is it good?
  • How to use economic calendar?

Economic calendar is a very useful tool and if you want to be good at trading you will have to start using it since no matter what kind of trader you are, it is used for every market(forex, commodities, etc.).  It is in such demand because it gives the traders straight news or indicators on what is going to happen in the industry and when is it going to be released. Some of the news are more important the others, usually that is noted. To keep track with calendar is important side when it comes to fundamental analysis and therefore can not be ignored. If you have ever witnesses a reversal on the chart, it was probably due to some important news – that is how much of an impact it does.

WHY IS IT BAD AND WHY IS IT GOOD?

You have to know that this tool can be used only as information source, meaning that it will not teach you how to be a better trader since it already thinks you know how to use it. You have to understand it and use it in proper way for trading. At first it is good that you just look at it and see certain events and check how the market responds to it, the more you will know the better you can actually trade. Try it on demo account first. This way you prepare for the market.

HOW TO USE ECONOMIC CALENDAR?

Anything you trade, any asset, let it that be currency or commoditiy, you have to be able to read the news and interpret it. Let us take a look at one example on how you can use economic calendar at your advantage and potential profit at the end. In this case we will take a look at GBP/USD pair and perform binary option trade.

From the picture below we can see release of a news that is interesting, which is boe inflation report. This report has been in downtrend for GBP from the start of financial crisis in 2008. The effects of that are still here and therefore the economy situation is not looking bright for british pound, therefore we decide to make a PUT on this trade in our prefered binary options broker.

economic calendar example

FINALE

Economic calendar is something that is a must have as you can see. It can help you soo much when it comes to trading, so start following it. We have one available for you to use it here. If you are a beginner i would suggest to follow few of the events very closely and see what happens. This way you ensure to know this for next time.


Moving averages crossover strategy

This is another strategy thatt is based on moving averages which is easy to follow. Please also, do not follow any strategy that says it is holy grail because there is no such thing and also do not buy anything that says will make you rich over night. Let us rather take a look at this beautiful simple system. It uses EMA (Exponential Moving Averages) with certain periods: 10, 25 and 50. Signal to when you can start thr trade is when the 10 period of EMA crosses or goes through the period of 25 EMA and 50 EMA, it has to go through both of them. Based on that, if it goes through them on the uptrend we trade a call and if it goes through it on downtrend we trade a put.

HOW THIS STRATEGY WORKS

You have now a basic outline how this strategy might work but let us take a look at details so you will not get confused, here are the exact settings needed in order to execute the trade based on this strategy. First thing you need to do is to open metatrader 4 and give in the indicators written below. You can use it for any currency pair. It should look like this:

moving averages example

TIME FRAME: 15 minute or 1 hour chart
INDICATORS TO USE: 10 EMA, 25 EMA and 50 EMA

ENTER THE TRADE:

  • CALL:
    • When 10 EMA goes through and crosses 25 EMA and also 50 EMA in uptrending.
    • Wait for a candle bar to close over 50 EMA for a clear signal.
  • PUT:
    • When 10 EMA goes through and crosses 25 EMA and 50 EMA in downtrend.
    • Wait for the candle bar to close over 50 EMA to avoid false signal.

Now we have everything in order. Patience is the key here to wait for the right moment, for the signal to show. You have to meet with the criteria we have outlined and act accordingely. This is how they look.

moving averages strategy

WHY IS THIS STRATEGY BAD AND WHY GOOD?

You have to know this is not trend following strategy but is basicly the opposite since you make the entry when there is change of the direction if you check correctly. But if all is executed as it should be, from teh point of entry in the trade, you are in the trend following direction. Problem is that it can happen to fake the signal that is why it is important to follow the rules and make sure you execute it only when the tiem is right and not before. And do not use the system with low volatility since it will be to no use. It is good since it is simple to follow since it only uses three moving averages and it is not really some sort of rocket science when it comes to it. It can return you with big profits if you know how to be dsciplined. If you see that the trade will go against you, you can use the feature that is supported by binary options brokers which is called close early and you get some money back, so you do not get maximum loss.

FINALE

I can already say you will get a few losses but keep your head straight and you will profit in the long run. As i always say, there is no perfect strategy out there, only good  and clear system and good money management can help you that is why you need to learn this, no shortcuts.


High or low 3 bars strategy

There is no perfect strategy, it is only strategy that can work for your personality and your style of trading. That is what you need to find. That is why even if the strategy is supposed to be the best, it can not work for you if you are not comfortable with it but it can be great for someone else. That is why it is good that you try and read many strategies and see what can work for you. So let us take at another binary options strategy.

HOW THIS STRATEGY WORKS?

I have to point out it is a simple strategy so it is easy to give it a try and see for yourself if it works for you. Only thing you will need here is to download this aprticular indicator, called Trend Winner:

Download Trend Winner here

Although it has this cheesy name it does the job done for this strategy. When you install the indicator, it will show you overall trend of the choosen asset and it will do so by changing the color from red to green and green to red. To put this into binary options trading, when you see green trend, then it is time for call only and when you see red, it is time only for put.

You now have some basic overview on how this works but we also need to determine when to enter the trade exactly. This is what you need to wait for, setp must be two one hour japanese candle bars of the same color as our indicator, trend winner is. The exact entry comes into place at the start of the third candle with the same color. Expiration time to use with this, should be 60minutes but you can also use higher time frames. For a higher win probability, it is suggested that the candles are in a slope motion, meaning there is a strong trend. Therefore it is not recommended to enter a trade when the price is the same height even though it is the same color, so make sure it is in a trend like shown here:

high or low 3 bars strategy

You can see white marked areas, each of them contains candles that are green colors and if you would take a call at each one of them at the begining of third candle, it would have been a successful trade. To make sure, here are entries you need to watch:

CALL:

  • When you see the trend winner indicator is in green color
  • Wait for two candle bars turn green, one after another and in a slope
  • Enter the trade at the start of third candle with a call

PUT:

  • When you see the trend winner indicator is in red color
  • Wait for two candle bars turn red, one after another and in a downwards slope
  • Enter the trade at the start of third candle with a put

WHY IS THIS STRATEGY BAD AND WHY GOOD?

As you can see it only works with a strong trend behind, so do not go into a trade if there is no trend since you will be out of your money. Of course you can easily avoid this by following the strategy rules, that is why it is good for you to keep with volatile binary options pairs. It is easy to follow the rules since it only wants you to determine colors and a slope. When you get this in order, you will have more winners then losers and that is the point.

FINALE

As with every strategy, you have to follow the rules that are meant for it, otherwise it is not the same strategy and you will get frustrated. It also uses higher time frames which means it is even more reliable to use. I think it is great for beginners to try this out but as always, test it first yourself.


Famous martingale strategy

It is more of a system then a strategy that is used in various fields and it is known for a long time, it could very well be one of the most known strategies. It is originating from France where they played a game of coins in q8th century where a player would win if the coin he tossed turns up heads and it loses if coin comes around on tails. As you see it has nothing to do with trading but you can apply it to trading. To simplify things, if this player wins then it is ok, he can go and spend the winnings but if he loses, he has to double the bet and win in order to cover the loss. Let us take a look at the example:

binary options martingale strategy

Starting with 1$ bet. Coin flips and is a loss, so the next bet is 2$. This way the player ensures that if he wins now, he covers for previous loss and also makes 1$. Now, he lost again, therefore he has to double the previous bet, which is 4$ now, which will cover his previous loss and also make him 1$ of profit. This can go on and if doubling the initial money would go on it would look like this: 8$, 16$, 32$, 64$, 128$, 256$, etc… Eventually it should win and cover the losses. This is the explanation on what in essence martingale strategy is.

WHY IS IT BAD AND WHY IS IT GOOD?

In theory it may sound good but think if 5, 10 or 15 strikes of loss occur, which is very possible. What to do then. Means that you would need a hefty amount of money in order to profit from such strategy and it can go out of control really fast. It is based on pure luck as tossing coins is. But there is also some hope aswell for it.

You need to also know that this is mathematically proven fact that eventually you should win. Loss after loss just means that you are closer to a win that is why you should keep in betting. Problem with this plan is that, as we have already pointed out, infinite amount of money and other hand also time but it is not as much as important as money is. No one from us has infinite money, otherwise we would be enjoying on the beach. But also, a trader does not gamble, he wants to put the percentage of win in his favor, that is why he does the analysis and prepare for the trade. Imagine then, this strategy with a great analysis, this way it is more possible to win but you really have to be consistent and not a beginner in order give it a try.

FINALE

I would still suggest that you use this at extreme precautious. This is more of a money management strategy if you look at it this way. As we say it is possible to use this to turn into profits for yourself but the other way of loss is also possible so keep it in mind. You have to be extremely cautious when dealing with this kind of things.


What is binary options builder tool?

Binary options builder tool is offering traders to customize and make their own trades from start. Basicly, you have a control to choose which asset, what expiration time, risk settings you are comfortable with and the amount to invest into. In theory, this is the best thing that can happen to a trader and least risky since you are in control of what is going to happen.

WHAT YOU WILL LEARN HERE:

  • What is binary options builder tool?
  • Why is it bad and why is it good?

WHAT IS OPTION BUILDER TOOL?

First step is simple since you just have to pick the asset you wish to trade. On the next step is where it is starting to differentiate from normal binary options trading. In normal setup, you would just click on the list and choose the expiration time while here the idea is to choose in a list of hourly, daily or weekly expiration time and also the minutes you want. This can be put into good use for traders who rely on news since you can close the trade before the news will come out so you make sure the investment is in safe place. It also comes in hand for traders who like to trade over night. Next or third step if you would have been trading normally, you would see one outcome or percentage of reward while with this tool you can pick from different outcomes that of course affect the payout or profit you will be able to get from the specific trade. It is reasonable that the lower you will want to risk, the lower be your reward at the end. After you have choosen and go through these steps, only thing that is left is to choose the amount you are willing to invest and start trading.

binary options builder tool

Let us take a look at the picture for example. We have choosen the asset that will expire in 3 hours and 10 minutes from the start of a trade and it will give us 62% of profit if the trade is going to be profitable and 20% if it is going to be a bad investment.

WHY IS IT BAD AND WHY IS IT GOOD?

In theory the tool is very good since who would not want to setup his own trade and profit from it. But if you login into your brokers platform and check this tool you will see it is actually very limited and not as described. All the options are preset and very limited. There is a room for imporvement of this tool to work as they describe it because it is definitely not working now as it should.
But on the other hand there is some advantage for traders who like to trade short term since it allow them to trade over the night. As you can see, majority of binary options is to trade through the day but with this you can trade over night if the market is open the next day of course.

FINALE

At first it felt like this is something that could benefit all but after using it and trying it out, for now it has far too much limitations to be worth of use. Maybe if you ahve some special strategy setup for it, then yes. Otherwise i would suggest to use normal binary options for now.


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